(202) 224-4515 Katie Niederee, Julia Lawless
Hatch Outlines Pro-Jobs, Pro-America Trade Strategy at BRT
Finance Committee Chairman Urges Administration to Pursue Three-Part Trade Strategy Focused on Job Growth & American Leadership
WASHINGTON –Senate Finance Committee Chairman Orrin Hatch (R-Utah) today outlined a three-part, pro-growth trade strategy that would put American leadership on center stage and focus on job creation at home. Hatch, who delivered the keynote address at an event co-hosted by the Business Roundtable (BRT) and Farmers for Free Trade, said the United States must advance a trade agenda that focuses on opening new markets for American goods and services, targets bad actors using existing trade tools, and protects American innovators by ensuring intellectual property (IP) is respected.
“While China’s leaders and America’s protectionists have different motives, they have the same ultimate goal: American retreat from open markets and global economic leadership,” Hatch said in his speech. “To preserve the international trading system that America has worked for decades to establish and maintain, we must address foreign challenges directly. At the same time, we cannot exacerbate these challenges with self-inflicted harm.”
Hatch went on to detail the benefits of a positive trade agenda that focuses on three key themes: 1) opening new markets to boost export opportunities; 2) target bad actors in the global trading system with existing trade tools; and 3) protect American ingenuity through strong patent and regulatory data protections.
“A trade agenda that focuses on these three priorities is a trade agenda that will defend American interests, strengthen the U.S. economy, and keep businesses – rather than the government – in charge of making business decisions,” Hatch continued. “Importantly, it is a trade agenda that Congress would support.”
Hatch’s full remarks, as prepared fordelivery, can be found below:
Thank you for that kind introduction. I hope that I can live up to it.
And, thank you to Business Roundtable and Farmers for Free Trade for hosting this event and having me here this morning.
I see my good friend Senator Baucus is set to appear on today’s panel, which is great. We miss Max in the Senate. He was always willing to reach across the aisle to find common ground. And, of course, he is a strong advocate for free trade, which is something we need more of in Washington these days.
The U.S. economy over the last year or so has had a pretty good run.
In 2017, we took a number steps to reduce excessive regulation. And, of course, we were able to enact the first comprehensive overhaul of our tax system in over three decades.
As a result, investment in the U.S. is increasing, workers are benefitting, and our companies are more competitive in the global marketplace. The overall economy is strong, and unemployment is low.
BRT recently released the results of its CEO outlook survey for the first quarter of 2018, the first since the enactment of the new tax law. I’m sure it’s no surprise to anyone here that the outlook index has reached its highest point in the 15-year history of the survey.
Member CEOs have indicated that their hiring plans, capital investment, and sales expectations have reached record highs.
I think that the new tax law had something to do with that.
Companies throughout the country, representing millions of workers, have announced plans to create new jobs, raise wages, and expand benefits to their employees. Others have announced plans to bring billions of dollars in offshore earnings back to the United States for investment here at home.
All of these events are the direct result of tax reform. And they all signal good news for our nation’s economy.
But let’s be clear: the gains could be squandered by bad policy decisions.
I have been in the Senate for 42 years, and this is one of the most challenging environments for U.S. trade that I’ve seen.
When it comes to trade policy, we’re all seeing the dangerous pitfalls that are currently in our path. They threaten to undermine and undo our recent success. Fortunately, in my view, those pitfalls are avoidable.
Let’s pause for a moment to reflect on what we have achieved and what is at risk.
I was born in the same year that Congress passed the Reciprocal Trade Agreements Act of 1934, one of the most important documents in our nation’s economic history.
At that time, the U.S. economy was in tatters, largely due to the effects of the Smoot-Hawley tariffs of 1930 and retaliatory protectionism from our trading partners.
But in 1934, Congress established a new set of trade principles for the United States: U.S. tariffs would be lowered to benefit American families and businesses and to incentivize other countries to open their markets to American goods. The American principles enshrined in that legislation—economic freedom at home and opportunity abroad—helped create an unprecedented era of American prosperity and global economic growth.
Those principles were the foundation on which the United States built the GATT in 1947 and the WTO nearly 50 years later.
They were the principles that guided us through the Cold War in our fight against competing economic systems of government-controlled markets and the absence of liberty.
Over those many years, while no one was forced to join the American-led economic system, more and more countries did so until these principles became a global consensus.
Long story short, American and global prosperity through free trade and open markets is a project that has spanned my entire life. I don’t intend to see that project abandoned.
But, make no mistake, the foundations of that global consensus are shaking, and the American-led economic system is being threatened, both by external opponents and internal skeptics.
Let’s talk for a moment about those external opponents.
The threat that China poses is real.
Let’s be clear: China is not a market economy.
After taking meaningful steps towards liberalization before and immediately following its WTO accession, China has charted a different course.
The largest economic actors in China are controlled by the state and the Communist Party.
Their investment decisions are made as much for political purposes as for economic returns.
Their overcapacity in steel and aluminum production is just one manifestation of a mismanaged economy imposed by the government, rather than a market economy developed by private enterprise.
Their government and state-owned enterprises have condoned and participated directly in the theft of trade secrets and the violation of intellectual property rights.
And they’ve used the Chinese regulatory system to restrict U.S. exports and investment and to force the transfer of American technology.
It’s fair to say that, when we’re talking about external threats to the American-led international system of free trade, China represents our biggest challenge.
But China is not our only challenge.
American innovation is being targeted for discriminatory treatment around the globe.
The European Union consistently targets American technology companies through state aid rulings, arbitrary privacy standards that conflict with the actions of EU member states, and, most recently, a leaked proposal to install “digital activities” taxes.
Canada, India, Korea, and others impose price controls that undermine market-based valuations of innovative medicines and medical technology that were only made possible by large R&D investments and years of hard work.
And America’s creative industries suffer billions of dollars in losses each year due to inadequate intellectual property rights protection and enforcement around the world.
The scope of these problems cannot be overstated. Fortunately, Congress has provided the tools necessary to address these problems, and I believe that we have an administration that is willing and capable to do so.
Unfortunately, some in the administration support foreign challenges to the American-led economic system. Challenges that are trying to bring that system down.
I’m not being hyperbolic when I say that.
While China’s leaders and America’s protectionists have different motives, they have the same ultimate goal: American retreat from open markets and global economic leadership.
To preserve the international trading system that America has worked for decades to establish and maintain, we must address foreign challenges directly. At the same time, we cannot exacerbate these challenges with self-inflicted harm.
That is why I was so disappointed with the president’s decision to impose tariffs on imports of steel and aluminum.
To be clear, no one should doubt that Chinese steel and aluminum overcapacity has harmed U.S. companies and workers. But, to put it bluntly, the global tariffs set to take effect on Friday will do absolutely nothing to address that problem.
Chinese companies don’t pay U.S. tariffs. Rather, American companies and American consumers get the bill.
That is a tax hike, pure and simple.
Policies designed to dictate from whom an American manufacturer purchases its inputs and raw materials directly contradict free-market principles, as well as the work that the president and Congress have done to reduce government regulation.
Permobil is a manufacturer of wheelchairs for high-need individuals with complex conditions such as ALS, Parkinson’s disease, and spina bifida.
Permobil employs 1,000 people across the United States, including in my hometown, Salt Lake City. Sixty percent of the cost of making these chairs is the cost of aluminum. And, thanks to the new tariffs, those higher costs are going to hurt this company and their customers.
Thanks to tax reform, I had been hoping that Permobil would expand its operations in Utah, but thanks to these now higher input costs, expansion will be that much more difficult.
Tariffs on steel and aluminum don’t help companies like Permobil and tariffs don’t help Utah.
At the end of the day, there is little difference between burdensome tariffs and suffocating regulations — both are unnecessary government intrusions into our economy and unjustified burdens on U.S. job creators. And putting farmers and ranchers on the front lines of retaliation — a very likely outcome of these tariffs — threatens rural communities across our country that are already hurting.
Meanwhile, China is not being incentivized to reform its steel and aluminum policies. So, if this is the start of a trade war, the only casualties thus far appear to be American manufacturers, American farmers and ranchers, American families, and America’s allies.
That’s the bad news.
Plain and simple.
And I know that all of us are doing what we can to move our country off this dangerous course.
The good news is that President Trump has indicated interest in trade policies that would result in job creation at home and American leadership on the international stage.
This positive trade agenda has three elements, all of which are steps that should be taken immediately.
Step One: Open new markets. The president is right that, too often, U.S. exporters face high tariffs and non-tariff barriers in foreign markets. However, since 1934, Congress has recognized that the solution is NOT to raise taxes on Americans through higher U.S. tariffs. Instead, the solution is to work to lower other countries’ barriers to American products and services.
The president has said that he prefers to negotiate trade agreements bilaterally. If that’s the case, then I urge him to do so, particularly in the Asia-Pacific, where U.S. firms and farmers are at a growing disadvantage to our competitors from Europe, Japan, Australia, Canada, Mexico, and elsewhere.
The president also has said that he is open to negotiating a substantially revised TPP. If he does so, he will have my support.
Step Two: Target specific practices by bad actors using existing tools. Chinese overcapacity can be targeted through enforcement of U.S. antidumping and countervailing duty laws and rigorous application of the Enforce-Protect Act, which the Finance Committee drafted and which was signed into law in 2015.
Targeted deployment of Section 301 investigations also can be used to bring China to the table to resolve long-standing issues. I know that many have concerns about the administration’s plans concerning Section 301 authority. So, let me emphasize that any actions that the administration intends to take under Section 301, whether aimed at China or elsewhere, must be narrowly targeted at the source of the problem and with an objective to bring about a positive resolution — and NOT for the purpose of erecting trade barriers.
State-directed Chinese investment should be viewed more skeptically, and we must work with like-minded countries to establish global trading rules that benefit American consumers, businesses, and workers, excluding China when necessary.
Step Three: Protect America’s creators and innovators. The administration must use every opportunity, including existing trade agreements and ongoing and future trade negotiations, to ensure that new copyright laws strengthen, rather than create exceptions to, protections for American creators.
Trade agreements also should eliminate barriers to trade in digital services, including burdensome localization laws and arbitrary cybersecurity and privacy regulations that impair the free flow of data between the United States and other countries.
Trade agreements, preference programs, and administration policy should seek to combat price controls that erode the value of American intellectual property rights holders.
A trade agenda that focuses on these three priorities is a trade agenda that will defend American interests, strengthen the U.S. economy, and keep businesses – rather than the government – in charge of making business decisions.
Importantly, it is a trade agenda that Congress would support.
I intend to spend the remainder of this Congress working to advance these three priorities.
When the president is right, I will continue to be his strongest supporter. When he is wrong, I will make my position clear and do my best to persuade him to correct course.
Congress will be diligent in performing its Constitutional duty to oversee trade policy. For example, with respect to NAFTA, the Finance Committee has monitored closely every round of the negotiations. In doing so, we have impressed upon the administration the importance of ensuring that a modernized NAFTA reflects the negotiating objectives set out in the bipartisan Trade Promotion Authority law. Achieving those objectives will be paramount for a final deal to gain congressional approval, which will be essential for a modernized NAFTA to become law.
Because the Constitution very clearly assigns to Congress the power to lay and collect tariffs and to regulate foreign commerce, Congress must have the final word on the fate of NAFTA. The same goes for our other trade agreements, and Congress will vigilantly monitor any developments concerning them as well.
Congress will use the extension disapproval process under the Trade Promotion Authority law to emphasize that the administration must adhere to the TPA negotiating objectives and to encourage the president to seek new agreements with our trading partners.
Of course, we will continue to work with the administration to realize the full benefits of tax reform and to pursue policies that will allow American businesses, innovators, farmers, and ranchers to continue to create jobs and prosperity for all Americans.
Thank you, once again, to BRT and Farmers for Free Trade for having me here today. And, thank you all for taking the time to listen.
God bless you all.
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